“They're funny things, accidents. You never have them till you're having them.”

Eeyore's advice notwithstanding, even experienced brokers can disagree about accident insurance.

One of the most debated topics in the benefits business—specifically in the worksite market—is the overall value of accident insurance for the consumer.

There's little doubt the overall popularity of accident insurance. It's a staple in a broker's worksite portfolio and employees—mostly male—still continue to buy it. That said, there are still a sizable minority of brokers and other insurance professionals who believe quite strongly that accident insurance is overvalued, over-used and remains a policy often misrepresented to employees.

Most brokers, though, still recognize the value of accident insurance and use it frequently. In reality, and pretty much like any other insurance product, the value of an accident plan is based on the situation for the group and the employee.

When discussing accident insurance, most brokers mention the importance of disability plans first. The accident detractors often point to confusion between a DI policy and an accident in some minds, and the fact that when offered side by side, sometimes the consumer will unwisely select the coverage of an accident plan when the disability plan is a much better value. The supporters of accident point out the cost savings when an employee cannot afford a disability plan and that having a strong accident plan, especially one with a sickness rider, can bring at least some protection for an employee.

“Granted” they say, “all things being equal a DI policy is best, but for the lower paid worker an accident plan is better than being totally unprotected.”

Of course, that is part of the problem to the anti-accident crowd. They believe that by representing this to an employee one is misrepresenting exactly what the policy does and what an indemnity-based accident policy is designed to do, which is pay a fixed amount for a specific occurrence. The pro-accident coverage crowd counters that any policy conflation is the fault of the enroller or the broker and that when explained properly it still brings a valuable insurance product to employees that otherwise would be left at the mercy of an accident or, in some cases, sickness.

Even if it's explained properly though, is there really any value to an accident insurance policy? The brokers who don't like accident plans unsurprisingly say no. Their belief is that having a menu that pays “x” amount for a broken finger and “y” amount for a broken leg is absurd and opens the insurance carrier up to a ridiculous amount of claims. Again the promoters of accident plans point out that all accident plans are not created equally. Some pay lump sums, some are designed differently all together, some have a very valuable sports rider and that the accident haters are looking at an antiquated plan and even then can't put themselves in the shoes of the ten dollar an hour oil change mechanic whose livelihood and the ability to feed their family relies on him not breaking an arm or at least having something there to help.

They also point out that for those who pay a little more, the accident coverage can help take the sting out of the cost of medical bills. Getting “x” amount for a broken finger sure can help pay for deductibles or other cost, after all that is partially why accident insurance was designed in the first place.

Another salient point that arises in the accident discussion is when to offer it in a worksite cycle. Every broker agrees that life insurance and disability insurance are the primary needs for all groups, assuming they can afford disability.

It's also common knowledge that offering more than two or three worksite products at a time almost always leads to a poor enrollment for all of them. Some believe accident is a definite first-year plan to be offered alongside life insurance or disability. Others though argued it's more of a second-year product to be offered upon re-enrollment. Obviously, that belief hinged on the total benefits package and other products included.

In the final analysis, even the accident detractors begrudgingly concede a value in the right accident plan, explained the right way, under the right circumstances. It could be a plan with a sickness rider or without, covering accident on the job, (or more commonly off the job), a plan with the sports package (or without) as long as it met the right criteria they saw the value.

The anti and pro accident insurance professionals do agree with each other on one other important facet. Whatever plan, with whatever company, had to have claims paid according to one “justly and quickly.” Nothing can ruin a group for a broker faster than unpaid—or slowly paid—accident claims. This is usually the first policy in a group that will post a claim, and probably will have more claims than any other single product. A slow response from a carrier will quickly get noticed by the entire group. That can hurt a broker's relationship with their client and directly affect re-enrollment and retention.

Instant Insights /

What's the value of accident insurance?

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